LendInvest publishes a blueprint for government treatment of property SMEs

The UK risks losing another generation of property SMEs as four in five SME housebuilders have disappeared since last housebuilding boom.

LendInvest, the online property finance marketplace, is calling on the government to revise its treatment of small and medium-sized property investment and development companies, and recognise the positive contribution they can make to resolving the UK’s deep-rooted housing crisis.

In a new report entitled Starting Small To Build More Homes: a blueprint for better policymaking for property SME market LendInvest brings together industry evidence for the first time to examine the root cause – and subsequent impact – of challenges faced by property SMEs such as constrained access to finance and distorted policy around regulation, taxation and access to land.

Five key findings in the report

Four in five housebuilders have gone out of business since the last housebuilding boom.

By returning to the same level of market plurality as in 2007, we could build 25,000 more homes every year.

Small housebuilders were responsible for three in eight of the UK’s new homes before 1990, today they only deliver one in eight.

The British Business Bank has yet to allocate funding for property firms.

The Homes and Communities Agency must lend a weighty £56 million a month to achieve its target to supply £3 billion of housebuilding finance by March 2021.

The report also illustrates the social and economic contributions that property investment and development SMEs make locally and nationally, and makes recommendations to end a protracted preference by government for muted support of this industry sector.

Recommendations in the report

  • Mandate state-backed finance bodies, like the British Business Bank and Homes and Communities Agency, to begin or accelerate the provision of funding to property SMEs.
  • Apportion a quota of public land for sale only to SMEs.
  • Simplify tax burdens to help property SMEs reinvest capital into business development.

Initiate a strategy to boost competition by enlisting cooperation of the offices of the Housing and Small Business Ministers.

Christian Faes, co-founder and CEO of LendInvest, comments, ’80 per cent of small-scale developers have gone out of business since the last housebuilding boom. That’s an appalling statistic. It’s meant less employment, less entrepreneurialism and fewer new homes on British streets where large-scale house-builders didn’t pick up the slack.

‘Decades of successive governments’ under-investment and muted decisions, coupled with a planning system that defaults to favouring larger sites over small ones has cumulatively left UK housing in a dire situation. The Housing White Paper showed us there are no quick fixes, but incremental improvements can and must be made.

‘If we’re going to encourage people to forge careers in property, they need to know that their businesses will be treated the same as start-ups and scale-ups in other productive sectors. Failing that, we risk losing another generation of property entrepreneurs. That mustn’t happen. It’s time to mix small-scale house-builders into the debate and give them the chance to help get Britain building.’

John Slaughter, director of external affairs at the Homes Builders Federation that supports the report and says, ‘Housing supply has increased 52 per cent in the last three years, but the majority of that has come from larger companies and we need to implement measures that can help get SMEs building more too if we are to fully address our national housing requirements. We welcome the LendInvest report’s contribution to the debate on how we do that.’

And Marc Vlessing, CEO of Pocket Living, the property SME, adds, ‘It is no coincidence that as the number of SME developers has declined so too has the number of homes built. A renaissance of SME firms like Pocket utilising modern methods of construction on smaller, often overlooked, land plots will be crucial to helping solve our housing crisis.

‘The government has laid the foundations for this renaissance through the Home Builders’ Fund but we still have some way to go. Simplifying the tax system, ring-fencing some public sector land for SMEs and making it simpler for them to access capital would all help to unleash the potential of the SME builder.’

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